India a great market for F&B players; Coffee Day will be a big brand in next 5 years: VG Siddhartha, CMD

Two decades haven't diluted the passion of Coffee Day's proprietor, who believes it is important to be paranoid to survive in the business. ( ​Nishikant Gamre)In a chat with ET Now, VG Siddhartha, CMD, Coffee Day Enterprises, shares his business outlook and sheds light on the much talked about IPO. Excerpts:

ET Now: First up, let's hear your general take on this IPO.

VG Siddhartha: I have met more than 150-200 investors during the last 45 days. All the feedback I got from them was positive. My belief is that we are building a great brand for the long haul — a brand India will be proud of.

I know that people with vision will support me. I will be thankful to all the investors who are going to support me.

ET Now: What is the main concern that prospective investors have brought to your notice?

VG Siddhartha: That the Indian markets are growing very slowly. Investors worry that the F&B market — specifically the coffee market — is growing at just single digits.

But all international players know that apart from the US, India will be the best market for them. The are, in fact, very gung ho about India.

ET Now: There have also been question marks on how CCD is structured — specifically the non-coffee business. What do you have to say to that?

VG Siddhartha: CCD has more than Rs 4,000 crore worth of non-coffee business. But I have told every investor that we won't put any money anywhere other than our coffee business in the next five years.

We have convinced lot of investors on that. I am sure that in the next five years we will build a great coffee business.

ET Now: As the issue opens, what kind of response are you expecting? You are optimistic, or nervous?

VG Siddhartha: I am not nervous at all. I am optimistic about getting a good response.

ET Now: How do you see the industry expanding from here?

VG Siddhartha: The industry will have 5,000 stores over the next five to seven years.

ET Now: How many Coffee Day out of that?

VG Siddhartha: I am not supposed to talk about it. We are the market leader. If the industry gets to 5,000 stores from 2000 stores, our share will be in line with our leadership position. The bottomline is that we would like to maintain our leadership.

ET Now: Do you not think expanding further will come in the way of profitability? Even now, depreciation cost is hindering profit, isn't it?

VG Siddhartha: Over the last 3-4 years, we been setting up almost 200 stores annually. Now the number will come down to 135. To that extent, depreciation will be under control, and the bottom line will improve substantially. That is what we believe will happen.

ET Now: How do you view Coffee Day's prospects in the light of the online shopping boom?

VG Siddhartha: You know, we are from Bangalore and naturally we have got good friends in technology. But I cannot predict or give a forecast of what we will do in technology. But you can be sure that we will use the best possible technology to take our business to the next level.

ET Now: Are you hinting at an online foray any time soon?

VG Siddhartha: I am not supposed to talk about it at this point. But when we do, we will give you the best technology.

ET Now: Do you see discretionary spend going up, because that would be an important factor for determining success of businesses like yours?

VG Siddhartha: Look, pessimists cannot do anything. India will give great opportunity. I feel that in the next 30 years, India will give a great opportunity to all of us. We are confident of building a great India brand from here.

ET Now: Will this be restricted to urban or semi-urban locales?

VG Siddhartha: No. It can go anywhere. India is giving a lot of opportunity to every entrepreneur everywhere.

ET Now: What kind of global potential do you see for yourselves?

VG Siddhartha: We are the only brand which is owned by an Indian company. All 400 coffee brands here are owned by American or European companies.

10 or 15 years down the line, we will make India proud when we start getting franchisee income for an Indian company from abroad. That is our dream.

ET Now: You have always been an extremely reclusive fellow. Now post this IPO, are we going to see a different Siddhartha?

VG Siddhartha: This company is completely managed by professionals, and so will it continue to remain. I only support them from the background.